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TAXATION LAW – LGC&CUSTOMS CASES that portions of the cable would definitely lie within Philippine waters.

Jann Claudine M. Amago 3 –A Jurisprudence on the Local Government Code is clear that facts such as
these must be threshed out administratively, as the courts in these types
1. Capitol Wireless Inc. vs. Provincial Treasurer of Batangas of cases step in at the first instance only when pure questions of law are
Capitol Wireless Inc. (Capwire) is a Philippine Corporation in the involved.
business of providing international telecommunications services. As such,
it signed agreements with other local and foreign companies such as ACPN b. Taxability – YES, SUBMARINE CABLES ARE TAXABLE.
covering international network of submarine cable systems. Petitioner Submarine or undersea communications cables are akin to
claims that it is the owner of “Wet segment” of ACPN and alleged that the electric transmission linesmay qualify as "machinery" subject to real
Wet segment is laid in international waters. property tax under the Local Government Code. To the extent that the
The Provincial ASSESSOR OF Batangas issued an assessment of Real equipment's location is determinable to be within the taxing authority's
property against Capwire. The provincial assessor had determined that jurisdiction, the Court sees no reason to distinguish between submarine
the submarine Cblle systems are taxable real properties. Capwire received cables used for communications and aerial or underground wires or lines
a warrant of levy and notice of sale. It filed a petition for prohinition and used for electric transmission, so that both pieces of property do not merit
declaration of nullity of levy and notice of sale butwas dismissed for a different treatment in the aspect of real property taxation. Thus, absent
failure to comply with sections 206 and 226 of the LGC. On appeal, the any showing from Capwire of any express grant of an exemption for its
court sustained the dismissal of Capwire’s petition for failure to comly lines and cables from real property taxation, then this interpretation
with Sections 226 and 229 of the LGC. applies and Capwire's submarine cable may be held subject to real
property tax.
Issue/s: Whether or not the dismissal of the petition was proper; May Having determined that Capwire is liable, and public
submarine cables be classified as real property taxable under the LGC? respondents have the right to impose a real property tax on its submarine
cable, the issue that is unresolved is how much of such cable is taxable
Ruling: based on the extent of Capwire's ownership or co-ownership of it and the
a. Dismissal – YES, THE DISMISSAL OF THE PETITION WAS PROPER. length that is laid within respondents' taxing jurisdiction. The matter,
Legal Basis: Sections 226 and 229, LGC however, requires a factual determination that is best performed by the
Section 226. Local Board of Assessment Appeals. - Any owner or person having legal Local and Central Boards of Assessment Appeals, a remedy which the
interest in the property who is not satisfied with the action of the provincial, city or
petitioner did not avail of.
municipal assessor in the assessment of his property may, within sixty (60) days from the
date of receipt of the written notice of assessment, appeal to the Board of Assessment
Appeals of the provincial or city by filing a petition under oath in the form prescribed for
the purpose, together with copies of the tax declarations and such affidavits or 2. Agriex Co. Ltd. Vs. Titus Villanueva
documents submitted in support of the appeal. Agriex Co., Ltd., a foreign corporation with principal office based in
Section 229. Action by the Local Board of Assessment Appeals. -
Bangkok, Thailand, entered into a contract of sale with PT. Gloria Mitra of
(a) The Board shall decide the appeal within one hundred twenty (120) days from the date
of receipt of such appeal. The Board, after hearing, shall render its decision based on Indonesia and R&C Agro Trade of Cebu City for 180,000 and 20,000 bags
substantial evidence or such relevant evidence on record as a reasonable mind might of Thai white rice, respectively. Vessel MV Hung Yen was chartered to
accept as adequate to support the conclusion. transport the cargo to the Subic Free Port for transhipment to Fiji Islands
(b) In the exercise of its appellate jurisdiction, the Board shall have the power to summon and Indonesia, and Cebu City.
witnesses, administer oaths, conduct ocular inspection, take depositions, and issue
When the petitioner requested permission from the Bureau of
subpoena and subpoena duces tecum. The proceedings of the Board shall be conducted
solely for the purpose of ascertaining the facts without necessarily adhering to technical Customs to unload the entire shipment of 200,000 bags of Thai white rice
rules applicable in judicial proceedings. because the MV Hung Yen must return to Vietnam, Commissioner Titus B.
(c) The secretary of the Board shall furnish the owner of the property or the person having Villanueva issued his 1st Indorsement directing Collector of Customs Billy
legal interest therein and the provincial or city assessor with a copy of the decision of the
C. Bibit to issue a Warrant of Seizure and Detention (WSD) against the
Board. In case the provincial or city assessor concurs in the revision or the assessment, it
shall be his duty to notify the owner of the property or the person having legal interest
20,000 bags consigned to R&C Agro. The WSD issued was later amended
therein of such fact using the form prescribed for the purpose. The owner of the property to include the vessel and the 180,000 bags intended for transhipment. The
or the person having legal interest therein or the assessor who is not satisfied with the issuance was based on the After Mission Report that the alleged
decision of the Board, may, within thirty (30) days after receipt of the decision of said consignees in Indonesia are not actually existing and that B.I. Naidu and
Board, appeal to the Central Board of Assessment Appeals, as herein provided. The
Sons, Ltd. of Fiji Island is not engaged in the importation of rice.
decision of the Central Board shall be final and executory.
Petitioner filed a motion to quash the WSD but Collector Bibit denied
In disputes involving real property taxation, the general rule is
the same. The WSD issued against the 20,000 bags consigned to R&C Agro
to require the taxpayer to first avail of administrative remedies and pay
was lifted by virtue of Commissioner Villanueva’s Order following the
the tax under protest before allowing resort to a judicial action, except
payment of the settlement value. Petitioner filed a petition for certiorari
when the assessment itself is alleged to be illegal or is made without legal
and prohibition in the CA alleging grave abuse of discretion on the part of
wuthority. Therefore, Capwire's resort to judicial action, premised on its
the respondents on the ground that they had no jurisdiction over the
legal conclusion that its cables (the equipment being taxed) lie entirely on
180,000 bags intended to be transported to foreign countries. The
international waters, without first administratively substantiating such a
respondents alleged that the petition should be dismissed on the ground
factual premise, is improper and was rightly denied. Its proposition that
that the proper remedy was to file the petition with the CTA and not with
the cables lie entirely beyond Philippine territory, and therefore, outside
the CA. The CA ruled in favor of the respondents stating that since the
of Philippine sovereignty, is a fact that is not subject to judicial notice
jurisdiction to determine the validity or regularity of the seizure and
since, on the contrary, and as will be explained later, it is in fact certain
forfeiture proceedings is lodged or vested on the Collector of Customs and
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then, to the Commissioner of Customs, which has already been done in Issue/s: Whether exhaustion of administrative remedies is necessary in
the case at bar, the next move of the petitioner should have been to file cases involving pure questions of law; Whether despite the illegality of the
an appeal to the CTA, and if unsatisfied, to the CA. ordinance, the city acted in excess of its power to tax

Issue: Whether or not the Bureau of Customs has exclusive original Ruling:
jurisdiction over seizure and detention cases in Subic Bay Freeport of a. FAILURE to exhaust administrative remedies.
dutiable goods. Legal Basis: Section 187 and 188, LGC
Section 187. Procedure for Approval and Effectivity of Tax, Ordinances and Revenue
Measures; Mandatory Public Hearings. - The procedure for approval of local tax
Ruling: YES.
ordinances and revenue measures shall be in accordance with the provisions of this Code:
The Bureau of Customs has exclusive original jurisdiction over seizure and Provided, That public hearings shall be conducted for the purpose prior to the enactment
detention cases in Subic Bay Freeport of dutiable goods. The Subic Bay thereof: Provided, further, That any question on the constitutionality or legality of tax
Freeport as a separate customs territory shall not divest the government ordinances or revenue measures may be raised on appeal within thirty (30) days from the
to intervene especially in cases when there are violations of tariff and effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60)
days from the date of receipt of the appeal: Provided, however, That such appeal shall
customs laws.
not have the effect of suspending the effectivity of the ordinance and the accrual and
Section 602 (g) of Republic Act No. 1937, otherwise known as the "Tariff payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30)
and Customs Code of the Philippines," provides the general duties, days after receipt of the decision or the lapse of the sixty-day period without the Secretary
powers and jurisdiction of the bureau shall include: of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings
xxx g. Exercise exclusive original jurisdiction over seizure and forfeiture with a court of competent jurisdiction.
Section 188. Publication of Tax Ordinances and Revenue Measures. - Within ten (10) days
cases under the tariff and customs laws xxx
after their approval, certified true copies of all provincial, city, and municipal tax
It is well settled that the Collector of Customs has exclusive ordinances or revenue measures shall be published in full for three (3) consecutive days
jurisdiction over seizure and forfeiture proceedings, and regular courts in a newspaper of local circulation: Provided, however, That in provinces, cities and
cannot interfere with his exercise thereof or stifle or put it at naught. The municipalities where there are no newspapers of local circulation, the same may be
posted in at least two (2) conspicuous and publicly accessible places.
Collector of Customs sitting in seizure and forfeiture proceedings has
exclusive jurisdiction to hear and determine all questions touching on the Clearly, the law reuires a dissatisfied taxpayer who questions
seizure and forfeiture of dutiable goods. the legality of an ordinance to file his appeal to the Secretary of Justice
Moreover, any prohibited or excluded articles found upon search, or within 30 days from the effectivity of thereof. The periods laid down
through any examination, audit or check of articles in the Zone by under Section 187 of the LGC are given for compliance as a prerequisite
Customs may be seized by Customs for violations of Tariff and Customs for seeking redress in a competent court. Any delay in the implementation
Code of the Philippines as amended and disposed of in accordance with of tax measure is detrimental to the public thus, the protests are required
law. Furthermore, as a rule, from the moment imported goods are to be done within certain frames. In the instant case, the petitioner’s
actually in the possession or control of the Customs authorities, even if no failure to appeal to the SOJ within 30 days is fatal to their cause.
warrant for seizure or detention had previously been issued by the
Collector of Customs in connection with the seizure and forfeiture b. POWER to create sources of revenue
proceedings, the BOC acquires exclusive jurisdiction over such imported Although CEPALCO does not question the authority of the
goods for the purpose of enforcing the customs laws, subject to appeal to Sangguniang Panlungsod of Cagayan de Oro to impose a tax or to enact a
the Court of Tax Appeals whose decisions are appealable to the Supreme revenue measure, CEPALCO insists that Ordinance No. 9503-2005 is an
Court. This is to render effective and efficient the collection of import and imposition of an income tax which is prohibited by Section 133(a)19 of the
export duties due to the State. Local Government Code. Unfortunately for CEPALCO, we agree with the
ruling of the trial and appellate courts that Ordinance No. 9503-2005 is a
Therefore, the Bureau of Customs committed no grave abuse
of discretion when it acquired jurisdiction over the seizure proceedings as tax on business. CEPALCO’s act of leasing for a consideration the use of its
the same is well within its exclusive jurisdiction as provided by law. posts, poles or towers to other pole users falls under the Local
Government Code’s definition of business.
3. Cagayan Electric Power&Light Co. Inc. vs. City of Cgayan De Oro CEPALCO is mistaken when it states that a city can impose a tax up
The City Council of Cagayan passed ordinance no. 9503-2005 to only one-half of what the province or city may impose. A more
imposing tax on the lease or rental of electric and/or telecommunication circumspect reading of the Local Government Code could have prevented
posts, poles, towers by pole owners to the other pole users at 10% of the this error. Section 151 of the Local Government Code states that, subject
annual income derived from such lease or rental. The city council to certain exceptions, a city may exceed by “not more than 50%” the tax
rates allowed to provinces and municipalities. CEPALCO also erred when
informed CEPALCO thru its president and chief operations manager of the
said ordinance. it equates Section 137’s “gross annual receipts” with Ordinance No. 9503-
CEPALCO filed a petition for declaratory relief assailing the validity 2005’s “annual rental income.” Section 2 of Ordinance No. 9503-2005
of the ordinance before the RTC on the ground that the disputed imposes “a tax on the lease or rental of electric and/or telecommunication
ordinance is in reality a tax on income which the City of CDO cannot posts, poles or towers by pole owners to other pole users at the rate of
imposed under the LGC. ten (10) percent of the annual rental income derived therefrom,” and not
The court ruled against CEPALCO. The appellate court affirmed the on CEPALCO’s gross annual receipts.
More importantly, because “any person, who in the course of trade
trial court’s decision.
or business x x x leases goods or properties x x x shall be subject to the
valueadded tax,”32 the imposable tax rate should not exceed two percent
of gross receipts of the lease of poles of the preceding calendar year.

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Section 143(h) states that “on any business subject to x x x value-added x established for the common good; and 2) the GOCC must meet the test of
x x tax under the National Internal Revenue Code, as amended, the rate economic viability. In this case, PRA may have passed the first condition
of tax shall not exceed two percent (2%) of gross sales or receipts of the of common good but failed the second one - economic viability.
preceding calendar year” from the lease of goods or properties. Hence, Undoubtedly, the purpose behind the creation of PRA was not for
the 10% tax rate imposed by Ordinance No. 9503-2005 clearly violates economic or commercial activities. Clearly, respondent has no valid or
Section 143(h) of the Local Government Code. legal basis in taxing the subject reclaimed lands managed by PRA. On the
other hand, Section 234(a) of the LGC, in relation to its Section 133(o),
4. Republic of the Philippines vs. City of Paranaque exempts PRA from paying realty taxes and protects it from the taxing
The Public Estates Authority (PEA) is a government corporation powers of local government units.
created by virtue of P.D. No. 1084 to provide a coordinated, economical Section 234(a) of the Local Government Code states that real
and efficient reclamation of lands, and the administration and operation property owned by the Republic of the Philippines (the Republic) is
of lands belonging to, managed and/or operated by, the government with exempt from real property tax unless the beneficial use thereof has been
the object of maximizing their utilization and hastening their granted to a taxable person. Section 133 of the Local Government Code
development consistent with public interest. states that "unless otherwise provided" in the Code, local governments
Then President Gloria Macapagal-Arroyo issued E.O. No. 380 cannot tax national government instrumentalities.
transforming PEA into PRA, which shall perform all the powers and In this case, there is no proof that PRA granted the beneficial
functions of the PEA relating to reclamation activities. By virtue of its use of the subject reclaimed lands to a taxable entity. There is no showing
mandate, PRA reclaimed several portions of the foreshore and offshore on record either that PRA leased the subject reclaimed properties to a
areas of Manila Bay,including those located in Parañaque City. Parañaque private taxable entity.
City Treasurer issued Warrants of Levy on PRA’s reclaimed properties
based on the assessment for delinquent real property for tax years 2001 5. Team Pacific Corporation vs. Daza
and 2002. PRA claimed that it is not a GOCC under the Administrative Team Pacific Corporation (TPC), a domestic corporation engaged in
Code, nor is it a GOCC under Section 16, Article XII of the 1987Constitution the business of assembling and exporting semiconductor devices,
because it is not required to meet the test of economic viability. It is a conducts its business at the FTI Complex in thethen Municipality of Taguig.
government instrumentality vested with corporate powers and It appears that since the start of its operations in 1999, TPC had
performing an essential public service. It insists that it may not be beenpaying local business taxes assessed at 1/2 rate pursuant to Section
classified as a non-stock corporation because it has no members and it is 75 (c) of the Taguig Revenue Code (TRC). When it renewed its business
not organized for charitable, religious, educational, professional, cultural, license in 2004, however, TPC’s business tax for the first quarter of the
recreational, fraternal, literary, scientific, social, civil service, or similar same year was computed by Josephine Daza, in her capacity as then
purposes, like trade, industry, agriculture and like chambers as provided Municipal Treasurer of Taguig, by applying the full value of the rates
in Section 88 of the Corporation Code. provided under Section 75 of the TRC,instead of the 1/2 rate provided
Thus, PRA insists that, as an incorporated instrumentality of the under paragraph (c) because, according to her, Section 75 (c) of the TRC
National Government, it is exempt from payment of real property tax applies only to exporters of essential commodities
except when the beneficial use of the real property is granted to a taxable e.g., (1) rice and corn; (2) wheat or cassavaflour, meat, dairy products,
person. PRA claims that based on Section 133(o) of the LGC, local locally manufactured, processed or preserved food, sugar, salt and other
governments cannot tax the national government which delegate to local agricultural, marine, and fresh water products, whether in their original
governments the power to tax. state or not; (3) cooking oil and cooking gas; (4) laundry soap, detergents,
and medicine; (5) agricultural implements, equipment and post- harvest
Issue: Whether or not Philippine Reclamation Authority (PRA) is an facilities, fertilizers, pesticides, insecticides, herbicides and other farm
incorporated instrumentality of the national government and is, therefore, inputs; (6)poultry feeds and other animal feeds; (7) school supplies; and
exempt from payment of real property tax (8) cement.
Constrained to pay the assessed business tax on January 19,
Ruling: YES, it is a Government Instrumentality. 2004 in view of its being a precondition for the renewal of its business
In the case at bench, PRA is not a GOCC because it is neither a permit, TPC filed on the same day a written protest with Daza, insisting on
stock nor a non-stock corporation. It cannot be considered as a stock the 1/2 rate on which its business tax was previously assessed.
corporation because although it has a capital stock divided into no par Subsequent to its demand for the refund and/or issuance of a tax credit
value shares as provided in Section 74 of P.D. No. 1084, it is not authorized for the sum of P104,054.88 which it considered as an overpayment of its
to distribute dividends, surplus allotments or profits to stockholders. PRA business taxes for the same year, TPC filed Rule 65 petition for certiorari
is a government instrumentality vested with corporate powers and before a Regional Trial Court (RTC).
performing an essential public service pursuant to Section 2(10) of the
Introductory Provisions of the Administrative Code. Being an incorporated Issue: Whether or not TPC availed of the correct remedy against Daza’s
government instrumentality, it is exempt from payment of real property illegal assessment when it filed its petition for certiorari before the RTC?
tax.
Many government instrumentalities are vested with corporate Ruling: NO.
powers but they do not become stock or non-stock corporations, which is The rule is settled that, as a special civil action, certiorari is available only
a necessary condition before an agency or instrumentality is deemed a if the following essential requisites concur:
GOCC. The fundamental provision above authorizes Congress to create (1) it must be directed against a tribunal, board, or officer
GOCCs through special charters on two conditions: 1) the GOCC must be exercising judicial or quasi-judicial functions;
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(2) the tribunal, board, or officer must have acted without or in excess of Ruling: NO.
jurisdiction or with grave abuse of discretion amounting to lack or excess Equal protection clause
of jurisdiction; and, It is unconstitutional for being violative of the equal protection
(3) there is no appeal nor any plain, speedy, and adequate remedy in the clause of the Constitution. The equal protection clause means that no
ordinary course of law. person or class of persons shall be deprived of the same protection of laws
Judicial function entails the power to determine what the law enjoyed by other persons or other classes in the same place in like
is and what the legal rights of theparties are, and then undertakes to circumstances. Thus, the guarantee of the equal protection of laws is not
determine these questions and adjudicate upon the rights of the parties. violated if there is a reasonable classification. For a classification to be
Quasi-judicial function, on the other hand, refers to the action and reasonable, it must be shown that (1) it rests on substantial distinctions;
discretion of public administrative officers or bodies, which are required (2) it is germane to the purpose of the law; (3) it is not limited to existing
to investigate facts or ascertain the existence of facts, hold hearings, and conditions only; and (4) it applies equally to all members of the same class.
draw conclusions from them as a basis for their official action and to Unfortunately, CMO 27-2003 does not meet these requirements. We do
exercise discretion of a judicial nature. Gauged from the foregoing not see how the quality of wheat is affected by who imports it, where it is
definitions, Daza cannot be said to be performing a judicial or quasi- discharged, or which country it came from.
judicial function in assessing TPC’s business tax and/or effectively denying Thus, on the one hand, even if other millers excluded from
its protest as then Municipal Treasurer of Taguig. For this reason, Daza’s CMO 27-2003 have imported food grade wheat, the product would still
actions are not the proper subjects of a Rule 65 petition for certiorari be declared as feed grade wheat, a classification subjecting them to 7%
which is the appropriate remedy in cases where the tribunal, board, or tariff. On the other hand, even if the importers listed under CMO 27-2003
officer exercising judicial or quasi-judicial functions acted without or in have imported feed grade wheat, they would only be made to pay 3%
grave abuse of discretion amounting to lack or excess of jurisdiction and tariff, thus depriving the state of the taxes due. The regulation, therefore,
there is no appeal or any plain, speedy, and adequate remedy in law. does not become disadvantageous to respondent only, but even to the
Narrow in scope and inflexible in character, certiorari is an extraordinary state.It is also not clear how the regulation intends to "monitor more
remedy designed for the correction of errors of jurisdiction and not errors closely wheat importations and thus prevent their misclassification." A
of judgment. It is likewise considered mutually exclusive with appeal like careful study of CMO 27-2003 shows that it not only fails to achieve this
the one provided by Article 195 of the Local Government Code for a local end, but results in the opposite. The application of the regulation
treasurer’s denial of or inaction on a protest. forecloses the possibility that other corporations that are excluded from
the list import food grade wheat; at the same time, it creates an
6. Commissioner of Customs vs. Hypermix Feeds Corporation assumption that those who meet the criteria do not import feed grade
Petitioner Commissioner of Customs issued CMO 27-2003. Under wheat. In the first case, importers are unnecessarily burdened to prove
the Memorandum, for tariff purposes, wheat was classified according to the classification of their wheat imports; while in the second, the state
the following: (1) importer or consignee; (2) country of origin; and (3) port carries that burden.
of discharge. The regulation provided an exclusive list of corporations,
ports of discharge, commodity descriptions and countries of origin. Limited the power of the customs officers
Depending on these factors, wheat would be classified either as food Petitioner Commissioner of Customs also went beyond his
grade or feed grade. The corresponding tariff for food grade wheat was powers when the regulation limited the customs officer’s duties
3%, for feed grade, 7%. CMO 27-2003 further provided for the proper mandated by Section 1403 of the Tariff and Customs Law, as amended.
procedure for protest or Valuation and Classification Review Committee Section 1403. – Duties of Customs Officer Tasked to Examine, Classify, and
(VCRC) cases. Under this procedure, the release of the articles that were Appraise Imported Articles. – The customs officer tasked to examine,
the subject of protest required the importer to post a cash bond to cover classify, and appraise imported articles shall determine whether the
the tariff differential. packages designated for examination and their contents are in
A month after the issuance of CMO 27-2003 respondent filed a accordance with the declaration in the entry, invoice and other pertinent
Petition for Declaratory Relief with the RTC. Respondent also alleged that documents and shall make return in such a manner as to indicate whether
the regulation summarily adjudged it to be a feed grade supplier without the articles have been truly and correctly declared in the entry as regard
the benefit of prior assessment and examination; thus, despite having their quantity, measurement, weight, and tariff classification and not
imported food grade wheat, it would be subjected to the 7% tariff upon imported contrary to law. He shall submit samples to the laboratory for
the arrival of the shipment, forcing them to pay 133% more than was analysis when feasible to do so and when such analysis is necessary for
proper. Furthermore, respondent claimed that the equal protection the proper classification, appraisal, and/or admission into the Philippines
clause of the Constitution was violated when the regulation treated non- of imported articles.
flour millers differently from flour millers for no reason at all. Lastly, Likewise, the customs officer shall determine the unit of quantity in which
respondent asserted that the retroactive application of the regulation was they are usually bought and sold, and appraise the imported articles in
confiscatory in nature. accordance with Section 201 of this Code.
The trial court ruled in favor of the respondents. On appeal, the CA Failure on the part of the customs officer to comply with his duties shall
held that, since the regulation affected substantial rights of petitioners subject him to the penalties prescribed under Section 3604 of this Code.
and other importers, petitioners should have observed the requirements The provision mandates that the customs officer must first
of notice, hearing and publication. assess and determine the classification of the imported article before
tariff may be imposed. Unfortunately, CMO 23-2007 has already classified
Issue/s: Whether or not CMO 27-2003 is vaild the article even before the customs officer had the chance to examine it.
In effect, petitioner Commissioner of Customs diminished the powers
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granted by the Tariff and Customs Code with regard to wheat importation On the issue regarding the state immunity doctrine, the
when it no longer required the customs officer’s prior examination and Commissioner cannot escape liability for the lost shipment of goods. This
assessment of the proper classification of the wheat. It is well-settled that was clearly discussed in the UNIMEX Micro-Electronics GmBH decision,
rules and regulations, which are the product of a delegated power to where the Court wrote: Finally, petitioner argues that a money judgment
create new and additional legal provisions that have the effect of law, or any charge against the government requires a corresponding
should be within the scope of the statutory authority granted by the appropriation and cannot be decreed by mere judicial order.
legislature to the administrative agency. It is required that the regulation Although it may be gainsaid that the satisfaction of respondent's demand
be germane to the objects and purposes of the law; and that it be not in will ultimately fall on the government, and that, under the political
contradiction to, but in conformity with, the standards prescribed by law. doctrine of "state immunity," it cannot be held liable for governmental
In summary, petitioners violated respondent’s right to due acts (jus imperii), we still hold that petitioner cannot escape its liability.
process in the issuance of CMO 27-2003 when they failed to observe the The circumstances of this case warrant its exclusion from the purview of
requirements under the Revised Administrative Code. Petitioners likewise the state immunity doctrine.
violated respondent’s right to equal protection of laws when they As previously discussed, the Court cannot turn a blind eye to
provided for an unreasonable classification in the application of the BOC's ineptitude and gross negligence in the safekeeping of respondent's
regulation. Finally, petitioner Commissioner of Customs went beyond his goods. We are not likewise unaware of its lackadaisical attitude in failing
powers of delegated authority when the regulation limited the powers of to provide a cogent explanation on the goods' disappearance, considering
the customs officer to examine and assess imported articles. that they were in its custody and that they were in fact the subject of
litigation. The situation does not allow us to reject respondent's claim on
7. Commissioner of Customs vs. AGFHA the mere invocation of the doctrine of state immunity. Succinctly, the
A shipment containing bales of textile grey cloth arrived at the doctrine must be fairly observed and the State should not avail itself of
Manila International Container Port (MICP). The Commissioner, however, this prerogative to take undue advantage of parties that may have
held the subject shipment because its owner/consignee was allegedly legitimate claims against it.
fictitious. AGFHA intervened and alleged that it was the owner and actual
consignee of the subject shipment. After the seizure and forfeiture 8. Philippine Fisheries Devt. Authority vs. CBAA
proceedings took place, the District Collector of Customs, MICP, rendered The records show that the Lucena Fishing Port Complex (LFPC) is one
a decision ordering the forfeiture of the subject shipment in favor of the of the fishery infrastructure projects undertaken by the National
government. AGFHA filed an appeal. The Commissioner rendered a Government under the Nationwide Fish Port-Package. The Philippine
decision dismissing it. The CTA-Second Division reversed the Fisheries Development Authority (PFDA) was created by virtue of P.D. 977
Commissioner’s August 25, 1995 Decision and ordered the immediate as amended by E.O. 772, with functions and powers to (m)anage, operate,
release of the subject shipment to AGFHA. and develop the Navotas Fishing Port Complex and such other fishing port
CTA issued a writ of execution to release the shipment to Agfha but complexes that may be established by the Authority. Pursuant thereto,
it was not implemented. Agfha filed before the CTA a motion to set case Petitioner-Appellant PFDA took over the management and operation of
for hearing to determine the amount Commissioner of Customs should LFPC in February 1992.
pay should the shipment be found to have been actually lost. CTA found In letter addressed to PFDA, the City Government
the Commissioner of Customs liable for the loss of the shipment and of Lucena demanded payment of realty taxes. Another demand letter was
ordered it to pay. On motion for reconsideration by both parties, CTA sent by the Government of Lucena City on the same LFPC property,
ordered that the taxes and duties on the shipment be deducted from the covering the period from 1993 to 2000. Petitioner-Appellant filed its
amount recoverable by Agfha. It then filed a motion for partial Appeal before the Local Board of Assessment Appeals of Lucena City,
reconsideration of the Resolution which was denied by the CTA. which was dismissed for lack of merit. Petitioner-Appellant filed its
Agfha filed before SC a petition for certiorari. The Commissioner of motion for reconsideration; this was denied by the Appellee Local Board.
Customs filed with the CTA en banc a petition for review while PFDA appealed to the CBAA. In its Decision dated 5 October 2005, the
Agfha filed a motion to dismiss, arguing that a petition for review is not CBAA dismissed the appeal for lack of merit.
the proper remedy to challenge an order of execution. The two petitions
were consolidated in this petition. Issue: Whether PFDA is liable for the real property tax assessed on
the Lucena Fishing Port Complex.
Issue: Whether or not the Court of Tax Appeals was correct in awarding
the respondent the amount of US$160,348.08, as payment for the value Ruling: NO. PETITION MERITORIOUS.
of the subject lost shipment that was in the custody of the petitioner. In the 2007 case of Philippine Fisheries Development Authority
v. Court of Apeals, the Court ruled that the Authority [PFDA] is not a GOCC
Ruling: YES. but an instrumentality of the national government which is generally
The Court agrees with the ruling of the CTA that AGFHA is entitled to exempt from payment of real property tax. However, said exemption does
recover the value of its lost shipment based on the acquisition cost at the not apply to the portions of the IFPC which the Authority leased to private
time of payment.The Court ruled that the rate of exchange for the entities. With respect to these properties, the Authority is liable to pay
conversion in the peso equivalent should be the prevailing rate at the time property tax. Nonetheless, the IFPC, being a property of public dominion
of payment. Payments of monetary obligations, subject to certain cannot be sold at public auction to satisfy the tax delinquency.
exceptions, shall be discharged in the currency which is the legal tender Indeed, the Authority is not a GOCC but an instrumentality of
in the Philippines. the government. The Authority has a capital stock but it is not divided into
shares of stocks. Also, it has no stockholders or voting shares. Hence it is
5
not a stock corporation. Neither is it a non-stock corporation because it disputed the tariff classification of Import Entry No. C-67560-03 and
has no members. The Authority is actually a national government recommended to the VCRC that the importation be classified at Tariff
instrumentality which is defined as an agency of the national government, Heading H.S. 2106.90 50 with the corresponding 7% duty rate. In order for
not integrated within the department framework, vested with special Import Entry No. C-67560-03 to be released, Marina once again signed an
functions or jurisdiction by law, endowed with some if not all corporate undertaking under the Tentative Release System
powers, administering special funds, and enjoying operational autonomy, On October 7, 2003, Marina appealed before the
usually through a charter. When the law vests in a government Commissioner challenging VCRCs reclassification. Apparently not in
instrumentality corporate powers, the instrumentality does not become conformity, Marina interposed a petition for review before the CTA. The
a corporation. Unless the government instrumentality is organized as a CTA Second Division ruled in favor of Marina holding that its classification
stock or non-stock corporation, it remains a government instrumentality under Tariff Heading H.S. 2106.90 10 was the most appropriate and
exercising not only governmental but also corporate powers. descriptive of the disputed importations. It opined that Marinas
Similarly, we hold that as a government instrumentality, the importations were raw materials used for the manufacture of its Sunquick
PFDA is exempt from real property tax imposed on the Lucena Fishing products, not ready-to-drink juice concentrates as argued by the
Port Complex, except those portions which are leased to private persons Commissioner. The Commissioner disagreed and elevated the case to the
or entities. CTA-En Banc via a petition for review, the CTA En Banc dismissed the
The exercise of the taxing power of local government units is petition.
subject to the limitations enumerated in Section 133 of the Local
Government Code.9 Under Section 133(o)10 of the Local Government Issue: Is a Motion for Reconsideration from the decision of a division of the
Code, local government units have no power to tax instrumentalities of Court of Tax Appeals mandatory prior to elevating the case to the Court of
the national government like the PFDA. Thus, PFDA is not liable to pay real Tax Appeals en banc; Whether the import duty of 1% is correct
property tax assessed by the Office of the City Treasurer ofLucena City on
the Lucena Fishing Port Complex, except those portions which are leased Ruling:
to private persons or entities. Besides, the Lucena Fishing Port Complex is 1. MFR - YES.
a property of public dominion intended for public use, and is therefore On the procedure, the Court agrees with the CTA En Banc that
exempt from real property tax under Section 234(a)11 of the Local the Commissioner failed to comply with the mandatory provisions of Rule
Government Code. Properties of public dominion are owned by the State 8, Section 1 of the Revised Rules of the Court of Tax Appeals requiring that
or the Republic of the Philippines. the petition for review of a decision or resolution of the Court in
The Lucena Fishing Port Complex, which is one of the major infrastructure Division must be preceded by the filing of a timely motion for
projects undertaken by the National Government under the Nationwide reconsideration or new trial with the Division. The word "must" clearly
Fishing Ports Package, is devoted for public use and falls within the term indicates the mandatory -- not merely directory -- nature of a requirement.
ports. The Lucena Fishing Port Complex serves as PFDAs commitment to The rules are clear. Before the CTA En Banc could take
continuously provide post-harvest infrastructure support to the fishing cognizance of the petition for review concerning a case falling under its
industry, especially in areas where productivity among the various players exclusive appellate jurisdiction, the litigant must sufficiently show that it
in the fishing industry need to be enhanced. As property of public sought prior reconsideration or moved for a new trial with the concerned
dominion, the Lucena Fishing Port Complex is owned by the Republic of CTA division. Procedural rules are not to be trifled with or be excused
the Philippines and thus exempt from real estate tax. simply because their non-compliance may have resulted in prejudicing a
partys substantive rights. Rules are meant to be followed. They may be
relaxed only for very exigent and persuasive reasons to relieve a litigant
9. Commissioner of Customs vs. Marina Sales, Inc. of an injustice not commensurate to his careless non-observance of the
Respondent Marina Sales, Inc. (Marina) is engaged in the prescribed rules.
manufacture of Sunquick juice concentrates As such, Marina usually
imports raw materials into the country for the purpose. In the past, the 2. Tarriff rate – YES.
Bureau of Customs (BOC) assessed said type of importations under Tariff At any rate, even if the Court accords liberality, the position of the
Heading H.S. 2106.90 10 with a 1% import duty rate. Commissioner has no merit. After examining the records of the case, the
For their March 6, 2003 importation, Marina computed and Court is of the view that the import duty rate of 1%, as determined by the
paid the duties under Tariff Harmonized System Heading H.S. 2106.90 10 CTA Second Division, is correct.
at 1% import duty rate. This time, however, the BOC examiners contested The table shows the different classification of Tariff import duties
the tariff classification of Marinas Import Entry No. C-33771-03 under relevant to the case at bar:
Tariff Heading H.S. 2106.90 10. The BOC examiners recommended to the TARIFF HEADING IMPORT DUTY COVERAGE
RATE
Collector of Customs, acting as Chairman of the Valuation and
H.S. 2106.90 10 1% Covers flavouring materials, nes., of kind used in
Classification Review Committee (VCRC) of the BOC, to reclassify Marinas food and drink industries; other food preparations
importation as Tariff Heading H.S. 2106.90 50 (covering composite to be used as raw material in preparing composite
concentrates for making beverages
concentrates for simple dilution with water to make beverages) with a H.S. 2106.90 50 7% Covers composite concentrate for simple dilution
corresponding 7% import duty rate. with water to make beverages

Marina, through its Product Manager Rowena T. Solidum and Customs H.S. 2009. 19 00 7% Covers orange juice, not frozen
H.S. 2009.80 00 7% Covers juice of any other single fruit or vegetable
Broker Juvenal A. Llaneza, attended the VCRC deliberation and submitted
H.S. 2009.90 00 10% Covers mixtures of juices
its explanation. Another importation of Marina arrived at the MICP
designated as Import Entry No. C-67560-03. Again, the BOC examiners
6
The Commissioner insists that Marinas two importations specify the proper fora and procedure for the ventilation of any legal
should be classified under Tariff Heading H.S. 2106.90 50 with an import objections or issues raised concerning these proceedings. Thus, actions of
duty rate of 7% because the concentrates are ready for consumption by the Collector of Customs are appealable to the Commissioner of Customs,
mere dilution with water. whose decision, in turn, is subject to the exclusive appellate jurisdiction
As extensively discussed by the CTA Second Division, to fit into of the Court of Tax Appeals and from there to the Court of Appeals.
the category listed under the Tariff Harmonized System Headings calling The rule that Regional Trial Courts have no review powers over
for a higher import duty rate of 7%, the imported articles must not lose such proceedings is anchored upon the policy of placing no unnecessary
its original character. In this case, however, the laboratory analysis hindrance on the governments drive, not only to prevent smuggling and
of Marinas samples yielded a different result. The report other frauds upon Customs, but more importantly, to render effective and
supported Marinas position that the subject importations are not yet efficient the collection of import and export duties due the State, which
ready for human consumption. Moreover, Marinas plant manager, enables the government to carry out the functions it has been instituted
Rebecca Maronilla, testified that the juice compounds could not be taken to perform. Even if the seizure by the Collector of Customs were illegal,
in their raw form because they are highly concentrated and must be which has yet to be proven, we have said that such act does not deprive
mixed with other additives before they could be marketed as Sunquick the Bureau of Customs of jurisdiction thereon. It does not mean however
juice products. If taken in their unprocessed form, the concentrates that correspondingly a court of first instance is vested with competence
without the mixed additives would produce a sour taste.[36] In other when clearly in the light of the above decisions the law has not seen fit to
words, the concentrates, to be consumable, must have to lose their do so. The proceeding before the Collector of Customs is not final. An
original character. To quote the CTA Second Division: appeal lies to the Commissioner of Customs and thereafter to the Court
Verily, to fall under the assailed Tariff Harmonized System of Tax Appeals. It may even reach this Court through the appropriate
Headings, petitioners (herein respondent) articles of importation, as fruit petition for review. The proper ventilation of the legal issues raised is thus
juices/mixtures, should not have lost its original character, in spite of the indicated. Certainly a court of first instance is not therein included. It is
addition of certain standardizing agents/constituents. Contrary thereto, devoid of jurisdiction.
We find the subject importations categorized as non-alcoholic composite
concentrates to have apparently lost their original character due to the 11. MIAA vs. CA
addition of ingredients in such quantity that the concentrated fruit juice Manila International Airport Authority (MIAA) is the operator of the
mixture only comprises a small percentage of the entire compound. Ninoy International Airport located at Paranaque City. The Officers of
Paranaque City sent notices to MIAA due to real estate tax delinquency.
10. Bureau of Customs and EIIB vs. Nelson Ogario MIAA then settled some of the amount. When MIAA failed to settle the
Felipe A. Bartolome, District Collector of Customs of Cebu, issued a entire amount, the officers of Paranaque city threatened to levy and
Warrant of Seizure and Detention of 25,000 bags of rice, bearing the subject to auction the land and buildings of MIAA, which they did. MIAA
name of "SNOWMAN, Milled in Palawan" shipped on board the M/V sought for a Temporary Restraining Order from the CA but failed to do so
"Alberto," which was then docked at Pier 6 in Cebu City. The warrant was within the 60 days reglamentary period, so the petition was dismissed.
issued on the basis of the report of the EIIB that the rice had been illegally MIAA then sought for the TRO with the Supreme Court a day before the
imported. The report stated that the rice was landed in Palawan by a public auction, MIAA was granted with the TRO but unfortunately the TRO
foreign vessel and then placed in sacks marked "SNOWMAN, Milled in was received by the Paranaque City officers 3 hours after the public
Palawan." It was then shipped to Cebu City on board the vessel M/V auction. MIAA claims that although the charter provides that the title of
"Alberto." Forfeiture proceedings were started in the customs office in the land and building are with MIAA still the ownership is with the
Cebu, docketed as Cebu Seizure Identification Case No. 17-98. On Republic of the Philippines. MIAA also contends that it is an
December 10, 1998, respondent Mark Montelibano, the consignee of the instrumentality of the government and as such exempted from real estate
sacks of rice, and his buyer, respondent Elson Ogario, filed a complaint for tax. That the land and buildings of MIAA are of public dominion therefore
injunction. The RTC ruled in favor of the respondents. As to the forfeiture cannot be subjected to levy and auction sale. On the other hand, the
proceedings, the court forfeited the cargo in favor of the government. officers of Paranaque City claim that MIAA is a government owned and
controlled corporation therefore not exempted to real estate tax.
Issue/s: Whether or not the RTC has jurisdiction; Whether the respondents
have exhausted the administrative remedies Issue/s: Whether or not MIAA is an instrumentality of the government and
not a government owned and controlled corporation and as such
Ruling: NO. exempted from tax; Whether or not the land and buildings of MIAA are
There is no question that Regional Trial Courts are devoid of part of the public dominion and thus cannot be the subject of levy and
any competence to pass upon the validity or regularity of seizure and auction sale.
forfeiture proceedings conducted by the Bureau of Customs and to enjoin
or otherwise interfere with these proceedings. The Collector of Customs Ruling: NO.
sitting in seizure and forfeiture proceedings has exclusive jurisdiction to Under the Localgovernment code, government owned and
hear and determine all questions touching on the seizure and forfeiture controlled corporations are not exempted from real estate tax. MIAA is
of dutiable goods. The Regional Trial Courts are precluded from assuming not a government owned and controlled corporation, for to become one
cognizance over such matters even through petitions of certiorari, MIAA should either be a stock or non stock corporation. MIAA is not a
prohibition or mandamus. It is likewise well-settled that the provisions of stock corporation for its capital is not divided into shares. It is not a non
the Tariff and Customs Code and that of Republic Act No. 1125, as stock corporation since it has no members. MIAA is an instrumentality of
amended, otherwise known as "An Act Creating the Court of Tax Appeals,"
7
the government vested with corporate powers and government of non-bank financial intermediaries, as provided in the same Section
functions. 108(A), which reads:
Under the civil code, property may either be under public SEC. 108. Value-added Tax on Sale of Services and Use or Lease of Properties.–
(A) xx
dominion or private ownership. Those under public dominion are owned
The phrase “sale or exchange of services” means the performance of all kinds or services
by the State and are utilized for public use, public service and for the in the Philippines for others for a fee, remuneration or consideration, including x x
development of national wealth. The ports included in the public x services of banks, non-bank financial intermediaries and finance companies; and non-
dominion pertain either to seaports or airports. When properties under life insurance companies (except their crop insurances), including surety, fidelity,
public dominion cease to be for public use and service, they form part indemnity and bonding companies..xx

of the patrimonial property of the State. The court held that the land and Coming now to the issue at hand – Since petitioner is a non-
buildings of MIAA are part of the public dominion. Since the airport is bank financial intermediary, it is subject to 10% VAT for the tax years 1996
devoted for public use, for the domestic and international travel and to 2002; however, with the levy, assessment and collection of VAT from
transportation. Even if MIAA charge fees, this is for support of its non-bank financial intermediaries being specifically deferred by law, then
operation and for regulation and does not change the character of the petitioner is not liable for VAT during these tax years. But with the full
land and buildings of MIAA as part of the public dominion. As part of the implementation of the VAT system on non-bank financial intermediaries
public dominion the land and buildings of MIAA are outside the commerce starting January 1, 2003, petitioner is liable for 10% VAT for said tax
of man. To subject them to levy and public auction is contrary to public year. And beginning 2004 up to the present, by virtue of R.A. No. 9238,
policy. Unless the President issues a proclamation withdrawing the airport petitioner is no longer liable for VAT but it is subject to percentage tax on
land and buildings from public use, these properties remain to be of public gross receipts from 0% to 5 %, as the case may be.
dominion and are inalienable. As long as the land and buildings are for
public use the ownership is with the Republic of the Philippines. b. DST – YES.
A pawnshop is liable for documentary stamp taxes. The subject of
12. First Planter Pawnshop, Inc. vs. CIR documentary stamp tax is not limited to the document alone. A pledge,
In a Pre-assessment Notice, petitioner was informed by the BIR that which is an exercise of the privilege to transfer obligations, rights, or
it has an existing tax deficiency on its VAT and Documentary Stamp Tax properties incident thereto, is also subject to Documentary Stamp Tax.
(DST) liabilities for the year 2000. Petitioner protested the assessment for
lack of legal and factual bases. Petitioner subsequently received a Formal 13. Petron Corporation vs. Tiangco
Assessment Notice, directing payment of VAT deficiency and DST Petron maintains a depot or bulk plant in Navotas Fishport
deficiency, inclusive of surcharge and interest. Petitioner filed a protest, Complex. Through the said depot, it sells diesel fuels to the vessels
which was denied by the Acting Regional Director. used in commercial fishing in and around Manila Bay. Later, Petron
Petitioner then filed a petition for review with the CTA, which upheld received a letter from the office of Mayor Tiangco assessing it for business
the deficiency assessment. Petitioner filed an MR which was denied. taxes in the amount of 6.2M covering 1997-2001 pursuant to the Navotas
Petitioner appealed to the CTA En Banc which denied the Petition for Revenue Code. A protest was filed by Petron arguing that under the IRR
Review. Petitioner sought reconsideration but this was denied by the of the NIRC, it is exempt from local business tax. Also, an opinion
CTA.. Hence, the present petition for review under Rule 45 of the ROC. was rendered by the Bureau of Local Government Finance providing for
The core of petitioner’s argument is that it is not a lending investor within that sales of petroleum fuels are NOT subject to local taxation. The letter
the purview of Section 108(A) of the NIRC, as amended, and therefore not protest was denied and a final demand to pay was sent to Petron. Petron
subject to VAT. Petitioner also contends that a pawn ticket is not subject filed a complaint for cancellation of assessment with TRO before the RTC.
to DST because it is not proof of the pledge transaction, and even RTC dismissed the complaint.
assuming that it is so, still, it is not subject to tax since a DST is levied on
the document issued and not on the transaction. Issue: Whether or not the Municipality of Navotas may impose tax on
Petron
Issue: Whether the petitioner is liable to pay VAT AND DST Ruling: NO.
Legal Basis: Section 133 (h), LGC
Section 133. Common Limitations on the Taxing Powers of Local Government Units. -
Ruling:
Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities,
a. VAT municipalities, and barangays shall not extend to the levy of the following:
The determination of petitioner’s tax liability depends on the tax (h) Excise taxes on articles enumerated under the national Internal Revenue
treatment of a pawnshop business. It was the CTA’s view that the services Code, as amended, and taxes, fees or charges on petroleum products;
rendered by pawnshops fall under the general definition of “sale or Section 133 prescribes the limitations on the capacity of the
exchange of services” under Section 108(A) of the Tax Code of 1997. Local Government Units to exercise their taxing powers otherwise
The Court finds that pawnshops should have been treated as non-bank granted by the LGC. Apparently, paragraph h mentions two kinds of taxes
financial intermediaries from the very beginning, subject to the which cannot be impose by the LGU: excise taxes on article enumerated
appropriate taxes provided by law. under the NIRC and petroleum products. The prohibition with respect to
At the time of the disputed assessment, that is, for the year petroleum products extends not only to excise taxes but all taxes, fees
2000, pawnshops were not subject to 10% VAT under the general and charges.
provision on “sale or exchange of services” as defined under Section
108(A) of the Tax Code of 1997. Instead, due to the specific nature of its 14. GSIS vs. City Assessors of Ilo-ilo
business, pawnshops were then subject to 10% VAT under the category A parcel of land known as Lot No. 22, Block 2, of the Subdivision
Record No. 8 situated in the District of Jaro, Iloilo City, Island of Panay,

8
registered in the name of GSIS c/o Rodolfo Ceres, of legal age, Filipino Petitioner, however, claims that RA 8291, which took effect in 1997, abrogated Section
Citizen and a resident of Iloilo City, Philippines, with an area of Two 234 (a) of the LGC of 1991.
Hundred Ninety Four (294) square meters, more or less. The abrogation or repeal of a law cannot be assumed; the intention
Private respondent Francisco purchased the subject properties to revoke must be clear and manifest. RA 8291 made no express repeal or
in the auction sales held for the satisfaction of delinquent real property abrogation of the provisions of RA 7160, particularly Section 234 (a)
taxes. After the lapse of the one-year redemption period and the failure thereof. Indeed, there is nothing in RA 8291 which abrogates, expressly or
of the registered owner or any interested person to redeem the impliedly, that particular provision of the LGC. The two statutes are not
properties, the Iloilo City Treasurer issued the corresponding final bill of inconsistent on that specific point, let alone so irreconcilable as to compel us
sale to private respondent. The sales were later on duly annotated on the to uphold one and strike down the other.
certificates of title on file with the Register of Deeds. However, the final This conclusion is buttressed by the Courts 2003 decision
bill of sale could not be registered because the owners duplicate in National Power Corporation v. City of Cabanatuan where we declared that
certificate of title was unavailable at that time. To effect registration in the tax provisions of the LGC were the most significant provisions therein
her name, private respondent instituted separate petitions for the entry insofar as they removed the blanket exclusion of instrumentalities and
of title in her name over the two lots with the RTCs of Iloilo City. Both agencies of the national government (like petitioner) from the coverage of
petitions were unopposed. Finding merit in her petitions, the RTCs, in local taxation. In that case, petitioner National Power Corporation (NPC)
separate orders issued on separate dates, directed the issuance of new claimed that it was an instrumentality of the government exempt under its
duplicate TCTs. No appeal was made from both orders of the charter from paying franchise tax. The Court overruled NPC and upheld the
courts a quo, hence, they became final and executory. right of respondent city government to impose the franchise tax on its
In a petition to annul the judgment of the trial court, petitioner, privilege to transact business in its area.
as the alleged previous owner of the parcels of land sold at public auction, The Court ruled that the exemption of a government-owned or
assailed the orders of the RTCs of Iloilo City before the CA. It claimed that controlled corporation from taxes and other charges was not absolute and
the assessment of real property taxes on it (GSIS) was void since, under could be withdrawn, as in fact certain provisions of the LGC, including Section
its charter (RA 8291), it was exempt from all forms of taxes (including real 234 (a), were deemed to have expressly withdrawn the tax-exempt privilege
property taxes on the properties held by it) that were due to the local of petitioner as a government-owned corporation.
governments where such properties were located. Furthermore, it Lastly, even if we were to construe that RA 8291 abrogated
claimed that the proceedings in the assessment and levy of said taxes, as Section 234(a) of the LGC, still it cannot be made to apply retroactively
well as the sale of the properties at public auction, were held without without impairing the vested rights of private respondent. The appellate
notice to it, hence, its right to due process was violated. court thus correctly stated:
The appellate court gave no credence to the arguments of It has been the courts consistent ruling that a repealing statute must not interfere with
vested rights or impair the obligation of contracts; that if any other construction is
petitioner and dismissed its petition. According to the CA, the exemption
possible, the act should not be construed so as to affect rights which have vested under
of GSIS under its charter was not applicable pursuant to Section 234(a) of the old law. Private respondent[s], we reiterate, have become the private owner[s] of the
RA 7160, otherwise known as The Local Government Code of 1991 (LGC). properties in question in the regular course of proceedings established by law, and after
Under that law, the tax-exempt status of GSIS cannot be invoked where the decisions granting such rights have become final and executory. The enactment of the
new GSIS Charter cannot be applied in a retroactive manner as to divest the private
the actual use or beneficial ownership of the properties under its title has
respondent[s] of [their] ownership.
been conveyed to another person. The CA added that there was also no
basis for GSISs claim that it was denied due process. 15. Sesbreno vs. CBAA
Petitioner bought land with improvements in Cebu in 1980. He
Issue: Whether or not the petitioner is exempt from tax declared the property on the land as a residential house of strong
materials with floor area of 60sqm. Effective 1980, the declared property
Ruling: NO. was assessed by the City Assessor of Cebu City at a market value of
Even if the charter of the GSIS generally exempts it from tax P60,000.00 and an assessed value of P36,900.00. During a tax-mapping
liabilities, the prescription is not so encompassing as to make the tax operation conducted in February 1989, the field inspectors of the Cebu
exemption applicable to the properties in dispute here. City Assessor discovered that the real property was actually a residential
In the early case of City of Baguio v. Busuego, it was held that the building consisting of 4 storeys with a fifth storey used as a roof deck. The
tax-exempt status of the GSIS could not prevent the accrual of the real estate building had a total floor area of 500.20 sqm. The area for each floor was
tax liability on properties transferred by it to a private buyer through a 100.04 sqm. The building was found to have been made of Type II-A
contract to sell. In the present case, GSIS had already conveyed the properties materials. On October 17, 1990, these findings were confirmed by the
to private persons thus making them subject to assessment and payment of Board of Commissioners in an ocular inspection conducted on the subject
real property taxes. The alienation of the properties sold by GSIS was the property. Based on the findings of the field inspectors, Respondent City
proximate cause and necessary consequence of the delinquent taxes due. Assessor of Cebu City issued a new tax declaration effective in the year
Further, the doctrine laid down in City of Baguio is reflected in 1989, canceling the old one, and assessing the building therein at a net
Section 234 (a) of the LGC, which states: market value of P499,860.00 and an assessed value of P374,900.00. The
Section 234. Exemptions from Real Property Tax. The following are
1981-1984 Schedule of Market Value was applied in the assessment.
exempted from payment of the real property tax:
Petitioner protested the new assessment for being "excessive and
(a) Real property owned by the Republic of the Philippines or any of its political unconscionable," contending that it was increased by more than 1,000%.
subdivisions except when the beneficial use thereof has been granted, for consideration The CBAA dismissed his protest. His appeal was met with an additional
or otherwise, to a taxable person. (emphasis supplied) assessment of back taxes.

9
Issues: Whether the raising of the issue of back taxes on appeal to the Section 23. Certification of Revised Values to the Secretary of Finance. — When the
provincial or city assessor shall have finished a general revision of property assessments
CBAA was proper; Whether the petitioner is liable for back taxes
for any province, municipality or city, he shall so certify to the Secretary of Finance and
the assessments shall become effective and taxes shall accrue and be payable thereunder
Ruling: in accordance with the provisions of this Code.
a. YES. Petitioner claims that Respondent City Assessor of Cebu City
An appellate court is clothed with ample authority to review has not yet completed the general revision of property assessments for
matters, even if they are not assigned as errors in their appeal, if it finds years 1981-1984 and has not yet submitted the certification required by
that their consideration is necessary in arriving at a just decision of the Section 23 of PD 464 to the Secretary of Finance; hence, he may not yet
case. Although the foregoing specifically referred to "appellate courts," be held liable to pay any assessment. He was wrong, of course, because
there appears no reason why these should not apply to appellate the general revision in question was approved by the Sec Fin on May 22,
administrative agencies, where rules of procedure are liberally construed. 984, effective July 1, 1987.

b. YES.
Arguing that he should not be liable for back taxes, petitioner
states that Respondent CBAA should have applied Section 24, instead of
Section 25, of PD 464. These statutory provisions read:
"Section 24. Date of effectivity of Assessment or Reassessment. — All assessments or
reassessments made after the first day of January of any year shall take effect on the first
day of January of the succeeding year: Provided, however, That the reassessment of real
property due to its (1) partial or total destruction, or to (2) a major change in its actual
use, or to any (3) great and sudden inflation or deflation of real property values, (4) or to
the gross illegality of the assessment when made or to any other abnormal cause, shall
be made within ninety days from the date any such cause or causes occurred, the same
to take effect at the beginning of the quarter next following the reassessment.
Section 25. Assessment of Property Subject to Back Taxes. — Real property declared for
the first time shall have back taxes assessed against it for the period during which it would
have been liable if assessed from the first in proper course but in no case for more than
ten years prior to the year of initial assessment; Provided, however, that the back taxes
shall be computed on the basis of the applicable schedule of values in force during the
corresponding period.
If said taxes are paid before the expiration of the tax collection period next ensuing, no
penalty for delinquency shall be imposed, otherwise the taxes shall be subject to all the
penalties to which they would have been liable had they originally become delinquent
after assessment of the property in the usual course."
Petitioner says that CBAA was wrong in applying Sec 25
because the property has been declared for assessment as early as 1980
(and before that by the previous owner) and not “for the first time” in
1989. He is of course wrong in his interpretation of “for the first time.” In
a similar case, it was held that it should not be understood to apply only
to real estate that have (sic) never been declared; as within the meaning
of such phrase, the excess areas resulting from the revision must be
understood as never having been declared before.
b) Market Value — is defined as "the highest price estimated in terms of
money which the property will buy if exposed for sale in the open market
allowing a reasonable time to find a purchaser who buys with knowledge
of all uses to which it is adapted and for which it is capable of being used."
It is also referred to as "the price at which a willing seller would sell and a
willing buyer would buy, neither being under abnormal pressure." (Sec
3(n), PD 464) Contrary to petitioner's contention, acquisition cost cannot
be and is not the sole basis of the current and fair market value of a
property. The current value of like properties and their actual or potential
uses, among others, are also considered. Unscrupulous sellers of real
estate often understate the selling price in the deed of sale to minimize
their tax liability. Moreover, the value of real property does not remain
stagnant; it is unrealistic to expect that the current market value of a
property is the same as its cost of acquisition ten years ago. In this light, a
general revision of real property assessment is required by law every five
(5) years to ensure that real properties are assessed at their current and
fair market values.
Petitioner argues that the CBAA erred in refusing to apply
Section 23 of PD 464 which provides:

10

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